Canadian interest rate decision and cpi inflation data in focus

Boc and inflation

During the upcoming trading week traders and investors look to a key interest rate decision from the Bank of Canada and important CPI inflation data from the United States and Chinese economies. The Bank of Canada is widely expected to keep interest rates unchanged after a series of disappointing data points from the Canadian economy and a sharp downturn in the value of Crude Oil.

Aside from the BOC rate decision and CPI inflation data releases, we also have Canadian Ivey PMI manufacturing figures and the US ISM non-manufacturing report this week. The eurozone economy releases key retail sales and unemployment data and the ECB Monetary Policy Accounts.

Monday 7th January, EUR EU Retail Sales

EU retail sales represent the sum of goods and services sold monthly at all eurozone retail outlets. The report acts as a measurement of consumption and consumer confidence. Consumer confidence and economic growth signal an increasing number of sales which would fuel the eurozone economy. Higher consumption can lead to inflationary pressures which may result in the European Central Bank adjusting its monetary policy.

The EURUSD pair is bullish while trading above the 1.1430 level, key resistance is found at the 1.1490 and 1.1550 levels.

If the EURUSD pair moves below the 1.1430 level, sellers will likely test towards the 1.1360 and 1.1300 support levels.

Tuesday 8th January, AUD Australian Trade Balance

The Australian Trade Balance is released by the Australian Bureau of Statistics and is the difference in value between imported and exported goods and services over a reported period. A positive number indicates that more goods and services were exported than imported and is known as a trade surplus if the exports exceed imports. The Trade Balance is essential to forecast long-term trends in foreign exchange rates and has historically been one of the more important reports out of Australia.

The AUDUSD pair is bearish while trading below the 0.7080 level, key support is found at the 0.6960 and 0.6800 levels.

If the AUDUSD pair moves above the 0.7080 level, buyers may test towards the 0.7150 and 0.7240 levels.

Wednesday 9th January, CAD BOC Rate Decision

The Bank of Canada Interest Rate Decision is a decision of the governing council members on where to set the nations interest rate. Market consensus has formed that the Bank of Canada will not hike rates this week due to uncertainty in the domestic and global economy. After the actual interest rate decision, the central bank releases a policy statement that contains the BOC’s collective perspective on the economy and also ideas about future monetary policy.

The USDCAD pair is bearish while trading above the 1.3450 level, key support is found at the 1.3280 and 1.3160 levels.

If the USDCAD pair moves above the 1.3450 level, buyers are likely to test towards the 1.3555 and 1.3680 resistance levels.

Thursday 10th January, CNY Chinese Consumer Price Index

The Chinese Consumer Price Index, released by the National Bureau of Statistics of China, measures the change in the price level of a market basket of consumer goods and services purchased by households. CPI is a key indicator that measures inflation and changes in purchasing trends and is closely watched by the PBOC. CPI is one of the most frequently used statistics for identifying periods of inflation or deflation.

The NZDUSD pair is bullish while trading above the 0.6650 level, further upside towards the 0.6730 and 0.6800 resistance levels seems possible.

If the NZDUSD pair moves below the 0.6650 level, sellers are likely test towards the 0.6580 and 0.6510 support levels.

Friday 11th January, USD US Consumer Price Index

US Consumer Price Index is released by the US Bureau of Labor Statistics and evaluates the fluctuations in the cost of living by measuring the changes in prices consumers pay for a set of items. CPI is used as the headline figure for inflation, as inflation reflects a decline in the US dollars purchasing power, which means that the US dollar depreciates and is therefore capable of buying fewer goods and services. In terms of an inflation measurement, the Consumer Price Index is the most obvious way to quantify fluctuations in purchasing power.

The USDJPY pair is bearish while trading below the 109.30 level, further losses towards 107.50 and 106.20 levels still remains possible.

If the USDJPY pair trades above the 109.30 level, buyers are likely to test the 110.00 and 110.55 resistance levels.